Instead of posting the week’s top value investing news, this week I plan to switch it up a bit. I will be posting my favorite post of the week. This week, my favorite news had to be Bruce Berkowitz on Consuelo Mack’s Wealthtrack.
Berkowitz is trimming his holdings in energy and is loading up on health care companies like Well Care Health (WCG). This came as no surprise as I have stated crude has had a nice run up, while health care stocks have been beaten down to levels not seen in quite a while. The two big stocks in the health care group United Health (UNH) and Wellpoint (WLP), seem to be getting the most attention from Gurus.Below is a small list of Gurus who have recently added to WLP and UNH. Data taken from Gurufocus.com
* Warren Buffett added 400,000 shares to UNH or an increase of 6%
* Bruce Berkowitz has 6% of portfolio in WLP or 11.015 million shares
* Seth Klarman has 11.6% of portfolio in WLP or 4.45 million shares
In addition, Morningstar.com recently mentioned they have estimated UnitedHealth’s fair value to be a “conservative” $60, providing a 50% margin of safety at current levels. I am pretty confident the margin of safety is the same for Wellpoint as both stocks have been equally beaten down with several gurus establishing big positions.
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What about health care REITs?
“REITs, by law, must pay 90% of their income to shareholders. In return, these companies pay little to no taxes. Health care REITs lease their buildings to medical-service providers or “operators,” who sign 10- to 20-year leases and are responsible for all property taxes, utilities, and expenses.
So health care landlords are practically immune to rising energy costs. In addition, automatic rent escalators – about 2%-4% annually – protect landlords from inflation.”
Source:
http://www.contrarianprofits.com/articles/the-safest-way-to-profit-as-the-boomers-retire/2902